Stake in Esquire Theater site to be auctioned

(Crain's) -- A key lender to Chicago developer Mark Hunt is seeking to auction off an ownership stake in the shuttered Esquire Theater to collect a $2.9-million debt on the prominent Oak Street development site.

An affiliate of little-known real estate firm Endeavor Cos. LLC has set a Sept. 1 date to sell Esquire Venture LLC, a company controlled by Mr. Hunt that in turn has an ownership stake in the venture that holds title to the nearly half-acre property at 58-104 E. Oak St., according to a notice published on Wednesday in a local newspaper. The notice does not specify why the debt is now due.

Endeavor's investment is apparently in the form of a mezzanine loan, which is like a second mortgage. The first mortgage lender on the site is Anglo Irish Bank, which holds a $32-million loan.

"We are hopeful we can work something out with the lenders," says Mr. Hunt, of M Development LLC.

Joshua Carl, managing principal of Chicago-based Endeavor, did not return a call requesting comment. A Chicago-based executive with Anglo Irish declines to comment.

The auction is part of a non-judicial proceeding under the Illinois Uniform Commercial Code that lays out sales procedures after a loan default.

The auction notice comes as many developers scramble to retain control over development sites amid the recession, which has stalled new construction, and the much tougher lending requirements, which has made refinancing existing loans very challenging.

On the Esquire site, Mr. Hunt has most recently been working on a retail development after he was unable to win zoning approval for a larger project that would have included a boutique hotel.

In addition to the Esquire site, Endeavor also has an investment in the shuttered Cedar Hotel on the Near North Side, according to Endeavor's Web site. A plan to build a hip hotel on the Cedar site fell apart late last year.